Open banking empowers individuals to benefit from their
financial data through a simple, secure connection they permission from their
banks to their favorite financial app.
Fintech services powered by open banking data are gaining
adoption across the banking and financial services industry. Consumers are
looking to save time and money and improve their financial health.
Recent industry survey data show us just how comfortable and
willing consumers are to utilise technology to manage their finances. These
insights also provide some clear indicators into what the landscape for open
banking and fintech looks like in the year ahead.
Consumer adoption of financial technology from paying
bills to crypto
Data from consumers in the United States and Canada
overwhelmingly show that they already embrace fintech and open banking.
Paying bills, one of the largest drivers of fintech
adoption, is now considered mainstream with eight in ten Americans indicating
they use a digital app, product, or service to accomplish this task. Other
routine financial services such as filing taxes and sending or paying money to
friends, family, and businesses have also moved to widespread digitisation.
More and more emerging types of fintech are gaining
popularity rapidly. The cryptocurrency market has grown significantly in
breadth and scope. While they’re still considered to be niche financial
instruments, 18% of Americans are beginning to use these new types of currencies.
Over half of those started using them just within the last year. And, close to
a third of consumers in the US have used digital apps to secure or refinance a
loan.
Younger generations will continue to drive this movement
Standing at the forefront of this digital movement are
millennials. Nearly three in four millennials claim they are very confident
using technology to manage money versus just over half of non-millennials.
Millennials are accustomed to doing many of their daily tasks digitally and
expect the same convenience, speed, and security for their finances. They are
used to plugging their personal information into an app and being instantly
connected to the world.
Gen Z and millennials are also more likely to link their
bank accounts to pay for recurring services, retail purchases, and digital
wallets. These digital natives are more willing to experiment with new tools in
relation to older generations. Overall, younger consumers are more likely to
believe that technology is just a better option, whereas baby boomers are half
as likely than millennials to think an app is better than any other tool that
exists.
While consumers across all generations express a broad
comfort with technology, it’s clear that Gen Z and millennial consumers are key
to driving the future adoption of open banking.
Personalisation will grow loyal customers
One of the key benefits of open banking is the creation of
more personalised financial services. Consumers can permission their data which
in turn creates more personalised financial experiences to meet their unique
needs. Over three-quarters of US and Canadian respondents are linking their
accounts today, especially younger and more diverse consumers.
Consumers are already connecting their financial data and
making it work harder for them via multiple platforms. While convenience and
ease are clear benefits, the power of open banking tools goes deeper.
Personalised financial tools that truly understand a
consumer’s spending, payment, borrowing, and other transactions can expand
access to services and financial products that otherwise may not have been
available to them.
Holistic views tell a bigger story
Personal financial management apps that provide a
comprehensive snapshot of a consumer’s finances will continue as a prominent
use case in open banking. As consumers become more reliant on technology in
different areas, they know and expect that they should be able to see the big
picture of their digital financial footprint.
Consumers are considering new experiences that can offer a
holistic view of their finances, to simplify processes like loans, paying off
student debt, and starting an automated savings habit. 74% of consumers in the
US say they utilise open banking to automate financial tasks and nearly
two-thirds say they connect their bank accounts to get a full picture of their
finances.
Zooming out and seeing the whole story gives a broader
perspective, providing context that helps inform how consumers approach their
spending, saving, and planning. Putting consumers at the center of how and
where their financial data is used ensures greater transparency, and in turn,
helps fintech companies, banks, and financial institutions gather feedback to
create new solutions and services more efficiently.
Convenience is a mighty driving force
Convenience and ease of use will be the driving force in
both the adoption of new financial services and the ways in which new consumers
are introduced to open banking.
People are already embracing digital solutions over
in-person financial experiences, with nearly two in three consumers in the US
and Canada saying fintech saves them time. And that initial step of introducing
consumers to open banking – by gaining consumer permission – has to be simple
and trustworthy. Banks and fintechs utilising secure API platforms built on
consumer-centric data principles will be necessary to continue driving the industry
forward.
With over nine in ten consumers reporting the use of
technology to manage money, understanding customer needs, desires, and pain
points is crucial. This will guide financial innovators to the right platform
on which to build and connect their open banking solutions. It will be their
primary growth strategy and will drive strong customer engagement and loyalty.
As they do this, they need to remember to keep consumers at
the center of the financial data experience. Give them control, make it easy to
connect to their information, and show them the powerful benefits of open
banking.
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